African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — FY2008 Earnings Presentation
23 slides from African Rainbow Minerals's earnings presentation, Sep 1, 2008
Slide 1: Joining the Big League: Provisional results for year ended 30 June 2008
JOINING THE BIG LEAGUE Provisional results for the financial year ended 30 June 2008 1 September 2008 Disclaimer Certain statements in this report constitute forward looking statements that are neither reported financial results nor other historical information, include but are not limited to statem
Slide 2: Overview and strategy
“During the past financial year ARM tripled headline earnings, increased dividends by 167% and is exceeding its 2005 objective of doubling production by 2010.” Patrice Motsepe Executive Chairman 3 Overview and strategy Patrice Motsepe, Executive Chairman 4 2
Slide 3: Highlights
Highlights • Record headline earnings increase by 232% from R1.2 billion to R4.0 billion or 1 906 cents per share • Profit from operations before exceptional items increase of 169% from R2.5 billion to R6.7 billion • Dividend increases 167% from 150 to 400 cents per share • Market capitalisation inc
Slide 4: Partner of choice; Headline earnings over 5 years
Partner of choice ARM positioned as partner of choice in the African mining industry • Quality, long-life resources with low-cost operations • >70 years operational mining and project skills • Strong balance sheet to support capital contributions • Active business relationships across Africa Platinu
Slide 5: More balanced and diversified earnings
More balanced and diversified earnings Annual growth in divisional attributable headline earnings 1300 1100 900 R million 700 500 300 100 -100 Platinum Nkomati Iron ore Manganese Chrome Coal 2006 2007 2008 In conjunction with our respective partners Anglo Platinum Impala Platinum Norilsk Nickel Asso
Slide 6: High margin diversified mining company; Delivering transforming growth
High margin diversified mining company ARM EBITDA margin is 57% for the period under review Manganese Nkomati Platinum Coal Iron ore Chrome 0% 10% 20% 30% 40% 50% 60% 70% 12 months to June 2008 11 Delivering company transforming growth Completed projects Projects in progress >R8 bn* 2004 – 2008: >R1
Slide 7: Continuous focus on reducing costs; Growing in Africa
Continuous focus on reducing costs ARM target for operations on the respective global cost curves by 2012 (steady state) Nkomati Chrome Manganese Smelter 2012 Goedgevonden Coal Modikwa Platinum Chrome Smelter Khumani Iron Ore Nchwaning Manganese Commodity Nkomati Nickel unit cash cost Two Rivers Pla
Slide 8: 2 x 2010 growth strategy - attributable
2 x 2010 growth strategy - attributable PGMs 450 Modikwa Two Rivers Nkomati 400 350 300 nces Thousand oun 250 200 150 100 50 - 2005a 2006a 2007a 2008a 2009e 2010e 2011e 2012e 8 Thermal Coal PCB GGV 7 6 5 Million tonnes 4 3 2 1 0 2005a 2006a 2007a 2008a 2009e 2010e 2011e 2012e 15 2 x 2010 growth stra
Slide 9: 2 x 2010 growth strategy – 100% basis
2 x 2010 growth strategy – 100% basis Manganese Ore Iron Ore 14,000 Khumani 4,000 12,000 3,500 Beeshoek Thousand ttonnes 10,000 3,000 8,000 , 2 500 2,500 2,000 6,000 1,500 4,000 1,000 2,000 500 0 0 2005a 2006a 2007a 2008a 2009e 2010e 2011e 2012e 2005a 2006a 2007a 2008a 2009e 2010e 2011e 2012e Ferro
Slide 10: Business review: Operational highlights
Business review André Wilkens, Chief Executive Officer 19 Operational highlights Strong operational volume highlights for the year include (100% basis, excluding PGMs): • 96 % increase in Nkomati chrome ore sales to 1.2 million tonnes • 60% increase in manganese ore sales to 3.7 million tonnes • 47
Slide 11: Costs contained with high margins; Incremental segmental results: EBIT
Costs contained with high margins % change (2008 vs 2007) Commodity yggroup p Unit cost ((metric)) ((decrease)/increase ) EBITDA margin g Iron ore R/tonne 65 48% Manganese ore R/tonne 19 73% Manganese alloys R/tonne 20 54% Charge chrome R/tonne 18 42% Platinum R/tonne (milled) 20 60% R/tonne Coal 1
Slide 12: Profit variance analysis; Dollar commodity price variance
Profit variance analysis Rand million 10,000 9,000 1,531 8 000 8,000 4,558 7,000 48 6,678 (1,967) (121) 6,000 5,000 4,000 3,000 148 2,481 2,000 1,000 - F 2007: Profit from Exchange rate Dollar Commodity Volume Cash Costs Non-cash costs Corporate and F 2008: Profit from operations (before Price (Depr
Slide 13: Volume variance analysis; US dollar revenue drivers
Volume variance analysis Rand million 2,000 1,800 47 26 1,600 104 1,531 135 (8) (43 ) 1,400 195 1,200 322 1,000 800 343 600 410 400 - 200 - Platinum Rhodium Charge Nickel Chrome Palladium Coal Other Iron Ore Volume Manganese Chrome Ore Note: Variance analysis not audited 25 Strong US dollar revenue
Slide 14: Strong US dollar commodity price momentum; Investing in our future
Strong US dollar commodity price momentum F2008 change to spot prices (at 21 August 2008) 200 190 385 180 170 160 150 140 130 120 110 Percentage (%) 100 90 80 70 60 50 40 30 20 10 0 -10 -20 -30 -40 Chrome Ore Manganese Manganese Platinum Rhodium Export Iron Ore ($/t) Palladium Rand/Dollar Nickel ($/
Slide 15: No significant impact due to electricity cutbacks
No significant impact due to electricity cutbacks ARM Ferrous ARM Platinum ARM Coal • Most operations at 90% of • All operations operating at 90% • All operations at 100% as steady-state steady state demand of steady-state steady state demand Eskom requires uninterrupted • Some offset between • No s
Slide 16: Nkomati Nickel Project; Khumani Iron Ore Mine
Nkomati Nickel Project 31 Khumani Iron Ore Mine Khumani Iron Ore Mine is 50% owned by ARM and 50% by Assore 8.4 mtpa construction complete 10 mtpa construction to be completed 1Q 2009 Mine design allows for flexibility to produce Typical grade of products different percentages of product specificati
Slide 17: Khumani Iron Ore Mine; Goedgevonden Coal Project
Khumani Iron Ore Mine Loading of first iron ore from Khumani, destined for Saldanha 33 Goedgevonden Coal Project Goedgevonden Coal Project (GGV) is 51% owned by ARM Coal and 49% owned by Xstrata 6.7 mtpa saleable Thermal Coal 3.2 mtpa export sales 3.5 mtpa domestic sales 27.5 mj/kg 22 mj/kg • ARM Co
Slide 18: Goedgevonden box cut; Two Rivers North Decline
Goedgevonden Coal box cut 35 Two Rivers North Decline • Achieved 40 000 tpm six months ahead of schedule • Certain months produced more than 60 000 tonnes • Broadly within budget Two Rivers’ mine plan North Decline – mining tonnes per month rate 36 18
Slide 19: Kalplats Platinum Project; Copper exploration DRC
Kalplats Platinum Project • PLA earning 49% by completing BFS Crater 12.98Mt @ 1.63g/t 3E • PLA has drilled 26 000 metres (230 holes) Vela • Total drilled to date 72 000 metres on Kalplats N • Drilling and resource evaluation in progress Sirius • BFS to be completed during F2009 Updated mineral reso
Slide 20: Copper exploration Zambia; Capital expenditure by division
Copper exploration projects : Zambia Konkola North • Five drill rigs in Zambia • Konkola North Area ‘A’ number of metres drilled over the last year is 12 700m of an 18 000m exploration drilling program Area Resource Tonnes Total Cu Area Resource Tonnes Total Cu Category (million) (%) Category (milli
Slide 21: Summarised income statement; Summarised balance sheet
Summarised income statement 12 months ended 30 June Reviewed Audited R million 2008 2007 % change Sales 12 590 6 152 105% Profit from operations (before exceptional items) 6 678 2 481 169% Income from investments 168 51 229% Finance costs (438) (370) (18%) Income from associate** 461 16 Exceptional
Slide 22: Summarised cash flow; Capacity to fund growth platforms
Summarised cash flow Reviewed Audited R million June 2008 June 2007 Cash generated by operations 5 175 2 537 Net finance costs (246) (246) Dividends paid (315) - Tax paid (466) (317) 4 148 1 974 Capital expenditure (2 659) (1 859) Investment into Coal - (841) Net borrowings raised / (repaid) (246) 1
Slide 23: Questions?
Questions? www.arm.co.za 45 23
African Rainbow Minerals — FY2008 Earnings Presentation on 6ix